Chorus [NZX: CNU] hasn’t said yet whether it will appeal the Commerce Commission’s decision not to backdate the latest changes to the pricing of copper wire phone services but does say the changes deliver it a $120 million boost to annual operating earnings.
If I was Chorus I’d be thanking Father Christmas (the Commerce Commission) for the 50 cent rise in their share price and take the $120 million with gratitude!
The corporate regulator has raised the total price Chorus can charge for its copper wire services by $6.75 a month compared with the $34.44 it has been charging since December last year.
The new price is a surprising $3.30 a month increase from the last draft decision in July and Telecommunications Commissioner Stephen Gale says that’s because the July decision inadvertently excluded trenching costs.
How can you forget trenching? Arguably the most expensive part for new installations.
The final copper wire price of $41.19, rising to $42.35 in 2020, isn’t very far from the $44.98 price Chorus had been allowed to charge up until last December – when Chorus was still part of Telecom, the price was about $1 a month higher again.
$3.50 a month cheaper is better than not cheaper at all, but disappointing the final price is so much higher than the draft price. The difference should be minimal if the draft is done correctly.
This handy table from Chris Keall shows the changes. $34.44 looked good to me! But the Commerce Commission has to follow the law which dictates a different methodology.